WeWork is one of the largest privately held tech startups in the world, but some people are doubtful about its long-term prospects. Its biggest critics see it for only its most well-known function, leasing flexible office space. According to an opinion piece by Andy Kessler in the Wall Street Journal, WeWork is nothing but “a giant arbitrage. The company controls spaces long-term and sells them in short increments.” Kessler’s criticism is valid, as this is a business model that may not work in the event of economic downturn, which many see as inevitable in the next few years, as companies cut costs such as the office space they may rent from WeWork.
Behind the scenes, however, WeWork is amassing the data, research, and technology that may make its services even more indispensable in the event of such circumstances. How? Through their “office space-as-a-service” products known as Powered by We.
More than Just a Real Estate Company
So, what is Powered by We?
Put simply, Powered by We is a set of offerings that creates custom workspaces and offices for other companies. Instead of a company renting space from WeWork directly, Powered by We can create offices, or renovate or provide services for existing offices owned by other businesses. Currently tailored toward large enterprise companies, WeWork envisions a future where any company can utilize Powered by We to increase the productivity and efficiency of their workspaces and make their workers happier. In this way, WeWork would function as a sort of office designer and manager, both creating a space that is designed for maximum productivity as well as providing the tools for organizing how that space will be used.
Examples of the services WeWork provides include designing entire office spaces, consolidating existing office spaces, and software allowing workers to book conference rooms, private rooms, or even desks. The company aims to act as a one stop shop for design, construction, supplies, software, and analytics with its Powered by We services, providing quite literally anything a company could possibly need for their offices.
Data-Driven Tools for Business
WeWork’s massive amount of data, stemming from surveys, observations, and sensors in WeWork owned properties, allows them to develop and sell these services. As the largest private tenant of office space in Manhattan, with customers ranging from contractors and small startups to a quarter of Fortune 500 companies, WeWork arguably collects more data on office operations than anyone else. For example, Chief Growth Officer Dave Fano told Business Insider in 2016 that the company wants to collect data on and optimize everything in office spaces, not just space. That includes heat, sound, light, and occupancy, in order to create the most energy-efficient, enjoyable offices possible for companies and their workers.
Through Powered by We, WeWork can use the analysis from this data to not only create productive workspaces in WeWork properties, but also as a service to sell to other companies.
Powered by We in Action
Without a doubt, Powered by We is still in its beginning stages. However, some of WeWork’s biggest clients are beginning to use the company for much more than just space. Already, WeWork manages a building in Manhattan for IBM and offices in Berlin for Airbnb and Boston for Amazon. Fano also revealed to TechCrunch that there were twenty more Powered by We deals coming, and that was at the beginning of 2018. Currently, WeWork’s website boasts Microsoft, Facebook, Salesforce, BlackRock, and Adidas as enterprise partners.
Powered by We is mostly focusing on efficiency at this point, according to another interview Fano gave to the Financial Times. Fano claims that the existing office market is extremely wasteful. Powered by We designs spaces that will be used in a more logical way, complete with smaller conference rooms and conversation nooks, and that get away from the classic one person-one desk mentality. Rather than having a desk for each person, which will inevitably be wasted space when people take vacations, are sick, or even just go to lunch, WeWork would rather create a solution that gives workers flexibility as to where they spend their time in the office. It sounds like a logistical nightmare, but Powered by We intends to make it easy, saving companies money and making workers happier along the way.
As the company with the most data on office spaces, as well as strong relationships with many of the largest enterprises in the United States already, WeWork is extremely equipped to provide these services that will be in increasingly high demand.
In general, I agree with the analysis that WeWork’s business model of renting office space is highly susceptible to problems in the event of economic downturn. Much of WeWork’s revenue comes from companies using their spaces as an extension of their own in periods of growth. When times are tough and costs are cut across the board, I would imagine that extra office space, flexibly leased through WeWork, would be the first thing to go.
However, I am extremely optimistic for Powered by We. Office management is a headache for many companies, and outsourcing it to WeWork, the company with the data and expertise to manage space more effectively than anyone else, will be extremely appealing to managers. Powered by We is all the more essential in economic downturns, as they have the tools to optimize space and cut office costs for virtually any company. As WeWork invests more resources into its development, it has the potential to be the company’s most important function going forward.